More Layoffs at Yahoo as Profits Fall 78%
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After the market closed, Yahoo reported that profits in the first quarter fell 78 percent from the same period last year. Net income for the first quarter checked in at $118 million, or 8 cents a share, down from $537 million, or 37 cents a share, last year.
"Yahoo is not immune to the ongoing economic downturn," Yahoo CEO Carol Bartz said in a statement. "While we experienced pressure in both display and search advertising in the first quarter, we believe Yahoo remains one of the most compelling advertising buys on the Internet."
Overall revenues for the quarter checked in at $1.58 billion, down 13 percent from the year-earlier period.
Yahoo's earnings and net revenues of $1.2 billion were in line with analysts' expectations according to polling by Thomson Reuters.
Bartz talked up the company's efforts to cut costs in the first quarter, noting that Yahoo's operating cash flow of $433 million was toward the high end of its goal.
The layoffs announced today follow on the heels of a 10 percent workforce reduction Yahoo announced last year. Yahoo said it plans to notify most of the affected employees within two weeks. The company also pledged to continue other avenues of cost reduction.
Bartz said that unlike last year's layoffs, which came in response to the macroeconomic downturn, the reductions announced today are the result of Bartz's efforts to streamline the company's operations and eliminate redundancies.
Bartz said to expect the deepest cuts in the product side of the business, where she said there are too many people overseeing the development of products but not enough engineers building them.
"We had one product management person for every three engineers," Bartz said. "Everyone was running around, but no one was f---ing doing anything," Bartz said, quickly apologizing for her slip of the tongue.
Going forward, Bartz pledged to continue investing in the company and said she looks ahead to hiring more engineers to keep competitive.
Today's results are the product of Bartz's first quarter at the helm of Yahoo, after taking the reins from cofounder Jerry Yang in January.
Yang's tenure as CEO is indelibly etched with the botched negotiations with Microsoft throughout much of last year, a dramatic series of deal talks that continue to cast a shadow over Yahoo's future.
Those talks, which began with Microsoft's hostile takeover bid and carried through several permutations of some form of search partnership, ended late last year with Yang facing harsh criticism for his unwillingness to ink the deal.
Microsoft CEO Steve Ballmer has continued to say that a deal with Yahoo is the best chance for the two companies to compete against Google in search.
Citibank analyst Mark Mahaney recently said that search is the most critical piece of Yahoo's business, particularly as marketers cut spending on display ads.
According to the most recent data available from comScore, Google enjoyed a 63 percent share of the search market, well ahead of Yahoo's 20 percent and Microsoft, a distant third with 8 percent of all U.S. search queries.
In the meantime, Yahoo has been pressing ahead with other initiatives, particularly with its designs on the mobile-ad market, rolling out its Mobile Web service as an app for the Apple's iPhone and several other smartphones in February. Earlier this month, Yahoo said Mobile Web was available on more than 300 devices worldwide.
Update adds comments from Yahoo's earnings call.